It is reported that DRB-HICOM Bhd and Volkswagen AG signed a memorandum of understanding to collaborate on the assembly and manufacturing of Volkswagen vehicles in Malaysia. The goal is to produce CKD (completely knocked down) Volkswagen in Malaysia.

CKD is basically a kit car. You get all the parts in a big box, and then assemble it locally, usually by hand. It’s one of the most nonsensical ways of building a car. The only sense it typically makes is to circumvent customs duty or other import restrictions. If those wouldn’t be there, importing the whole car would make more sense.

CKD assembly is the core business of DRB-HICOM. They have experience in assembling foreign cars for Honda, Suzuki and Mercedes-Benz in Malaysia.

The Volkswagen CKD models will be assembled in Pekan, one of DRB-HICOM’s plants in Malaysia.